Nature view Farm
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MKTG 5801 – Dr. Neeraj Bharadwaj Binh Tran, Jai Gulati, Geoff Fadden & Amir Kesten Agenda Natureview background The yogurt industry and Organics C’s & P’s The options & Dilemma Option analysis what Would you dO?? Recommendation Background Manufacturer and marketer of refrigerated cup yogurt Success factors – Strong brand Low cost National distribution within natural foods channel Strong relationships with distributors Differentiators – Natural ingredients Long shelf life Reputation for high quality and good taste Background (cont.) Founded with two yogurt flavors with ~ $100K Revenue 1989 Wagner arranged for infusion of VC Capital to fund investments 1996 Jim Wagner joined company as CFO 1997 1999 Revenue Reached 13 MM 2000 VC firm wants out Growth of $20M needed by end of year 2001 yOgurt iNdustry & ORGANICS Yogurt Sales Supermarkets Yogurt Sales by Size Natural Food Stores 6 & 8 Oz 3% 8% Multi Pack 32 Oz Others 9% 9% 74% 97% Yogurt Consumption in Million* Non Consuming Heavy Organic Food Buyer (organic Dairy) 175 Small Health Foods Stores Women 77 Men Yogurt Consumption in Million 33 0 50 19% Natural Food Stores 22% Supermarkets 100 150 200 * This Data is from US population of the year 1999 based on US Census Heavy Organic Food Buyer 34% 0% 10% 20% 30% 40% • Brokers • Distributors • Wholesalers • Retailers Context • Horizon – Organic (Cash heavy and national brand) Shorter shelf life compared to Natureview • Brown Cow – Natural not Organic (Presence in West Coast) Collaborators • 12 Flavors in 8 Oz cups and 4 in 32 Oz • Longer shelf life • Not treated with rGBH • Strong relationships with leading natural food retailers Competitors • Natural Food Customers • Women (single and with kids) • High Income and more educated • Live in Northeast & West Coast Company Customers Do you remember your C’s ? • 58% of yogurt consumer would buy Organic if price was less expensive • Long term growth requires $30mm Capital spend • Organic food socially on the rise What about the p’SSS not Product Price Place Promotion • Size • Flavors • Natural • Organic • Supermarket Channel • Natural Foods Channel • Natural Food Channel • National Retailer Channel • Wholesale/ Clubs i.e. Costco, Sam’s • Convenience Store • Drug Stores • Retail level • Wholesale level • Distributor level Are we having fun YET!! Options & Dilemma Option 1 Option 2 Option 3 Expand in 2 supermarket Regions (Northeast & west) Expand Nationally Stay in Natural Food Chains Introduce 6 SKU’s of 8oz products Introduce 4 SKU’s of 32oz products Introduce 2 SKU’s of children’s Multipack Go–To StrategY 8 oz cup • $.74 8 oz cup • $.88 4 oz multipak • $2.70 4 oz multipak • $3.19 32-oz cup • $2.85 32-oz cup • $3.35 Natureview Farm Natureview Farm Sales Brokers Natural Foods Wholesalers Natural Foods Distributors Retailers Retailers Consumer Consumer AnalysiS analYsis explained $45,000,000 300% $40,000,000 $35,000,000 250% $30,000,000 200% Incremental Sales $25,000,000 Gross Profit $20,000,000 Total Costs 150% $15,000,000 Profit Contribution $10,000,000 Total Sales Projection 100% $5,000,000 Required Investment % Increase $0 50% Gross Margin $5,000,000 $10,000,000 0% What would you do? Recommendation Go with Option 3 Less risky Gets us to our target Does not cannibalize our existing customers and partners Gives us a boost to get into the retail space at a later date Revisit the retail options after we meet our 20M target and Investment is secured
